Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

The Ugly Truth Behind Dry Ships Inc. Betraying Investors

Dry bulk shippers have seen shares rally as of late, but are investors being led into a trap?

A strong rally in the dry bulk shipping sector over the past several months has led many investors to companies like Dry Ships (NASDAQ:DRYS). But before you hop on board, don't ignore one very big warning sign. Several related-party transactions are funneling millions of shareholder dollars into businesses privately owned by Dry Ships' CEO.

In 2012 alone, Dry Ships expensed $38.08 million from the company's coffers into several companies owned by the CEO. This included $6.2 million paid to the CEO in the form of stock-based compensation. These are just two of many worrying signs behind the related-party transactions taking place at Dry Ships recently.

In the video below, Motley Fool analyst Blake Bos explains exactly what a related-party transaction is, what kinds of transactions are taking place at Dry Ships, and whether investors should care about them.

Author

The Motley Fool's industrials analyst, I specialize in 3-D printing and also do my best to stay up-to-date in the fields of robotics and oceanic transportation. Follow me on Twitter, Google+, and/or Facebook below for the most important 3-D printing industry developments and other great stories.